Material Insights · Understanding the Material World

Electric and hybrid vehicles and Nickel

Long-range electric cars mostly run on nickel-rich NMC and NCA batteries, but iron phosphate (LFP) cells made up over 55% of EV batteries worldwide in 2025, so EV growth no longer translates one for one into nickel demand. Stainless steel, not cars, still takes most of the world's nickel.

Electric and hybrid vehicles (energy) and Nickel (commodity): 4 relationships.

How they are linked

1. Material need: nickel cathodes

Physical flow · Asymmetric · Nickel to NMC and NCA battery packs

Nickel in the cathode raises the energy stored per kilogram, which gives a car more range for the same battery weight, so premium and long-range EVs favour nickel-rich chemistries.

  • 80% nickel share of cathode metals in NCA
  • 60 to 80% nickel share in NMC, with newer grades near 90%

The need depends on chemistry, not on the vehicle: an EV with an LFP pack uses no nickel in its cathode at all. Where LFP has made little headway, such as the EU, where it was only a little over 10% of EV battery demand in 2025, carmakers remain the core battery buyers of nickel. Newer NMC grades approach 90% nickel, so the nickel-based packs that remain are becoming more nickel-intensive.

Sources: IEA; Nickel Institute

2. LFP shift cuts nickel intensity

Transition · Rising · EV battery mix moving away from nickel

LFP cells are cheaper and longer-lived, and their energy density is now enough for most mass-market cars, so each gain in LFP share lowers the average nickel needed per EV sold.

  • over 55% LFP share of EV batteries deployed worldwide, 2025
  • nearly 50% LFP share, 2024
  • more than 10% LFP share of EV battery demand in the EU, 2025

The shift is concentrated in China; in the EU the LFP share stayed at a little over 10% in 2025, similar to 2024. Battery nickel demand therefore hangs on EV sales outside China and on whether Western carmakers adopt LFP for cheaper models. The International Nickel Study Group reported that nickel use in EV batteries declined slightly in 2025 even as EV battery deployment grew by almost 30%.

Sources: IEA; Stainless Steel World

3. Demand driver, but a minority use

Transition · Medium · EV batteries add to nickel demand at the margin

Batteries are the newest large use of nickel, but stainless steel takes most of it, so EVs move the nickel balance only at the margin while Indonesian supply growth sets the price.

  • just under 70% stainless steel share of nickel consumption, 2025
  • 2.6 of 3.9 Mt Indonesia's mine output against the world total, 2025 estimate
  • about USD 15,000/t average LME cash price, 2025, down 11% on 2024

Nickel prices kept falling from their 2022 highs in 2025 as Indonesian output rose, even though EV battery deployment grew that year. The battery pull has been too small to offset new supply, and cheaper nickel has not stopped the shift to LFP.

Sources: IEA; Stainless Steel World; USGS

4. Price link: weak

Cost and price · Weak · Both ways

Nickel is a small part of the cost of a car, and vehicle prices follow model cycles and incentives, so nickel price swings barely reach the vehicle price index.

  • -0.15 monthly change correlation, nickel and US vehicle prices
  • -0.21 12-month change correlation
  • -0.07 fitted elasticity

A negative and small correlation means there is no usable price signal between the two series. The link runs through battery cell costs and chemistry choice rather than through vehicle prices, so battery pack prices and LFP share are better indicators of the relationship than car price indices.

Sources: Material Insights (World Bank, FRED, IMF data)

For investors

Key learnings

  1. EV sales growth is a weak guide to nickel demand because the LFP share, now over half of EV batteries, decides how much nickel each new car uses.
  2. Battery nickel demand depends on markets where LFP has made little headway, such as the EU, where LFP was only a little over 10% of EV battery demand in 2025.
  3. Stainless steel and Indonesian supply growth, not EVs, have set nickel prices, which fell a further 11% in 2025 to an LME cash average of about USD 15,000 a tonne even as EV battery deployment grew by almost 30%.

What to track

  • LFP share of EV batteries by region: A rising share outside China would remove the main remaining source of battery nickel demand (Annual · IEA Global EV Outlook)
  • LME nickel cash price: Sustained rises push carmakers further towards LFP; low prices support nickel-rich packs (Daily · LME)
  • Nickel use in batteries: Shows whether battery demand is still growing as a share of the market (Twice yearly · International Nickel Study Group)

For policymakers

Key learnings

  1. Supporting LFP or sodium-ion cells reduces a country's exposure to nickel supply, which is concentrated in Indonesia.
  2. Nickel-based batteries remain the choice for long-range vehicles, so some nickel demand will persist even as LFP spreads.
  3. Battery incentives that are neutral on chemistry let carmakers switch away from nickel when its price or supply risk rises.

What to track

  • Battery chemistry mix in domestic EV sales: Shows how much nickel a national EV programme will need to import (Annual · IEA Global EV Outlook; national vehicle registries)
  • Indonesian share of world nickel mine output: Higher concentration raises supply risk for battery makers that need nickel (Annual · USGS Mineral Commodity Summaries)

Sources

  1. Global EV Outlook 2026: electric vehicle batteries, IEA (2026)
  2. Nickel in batteries, Nickel Institute (2025)
  3. The world nickel market in 2025 and 2026: five years of surpluses (INSG forecast), Stainless Steel World (2025)
  4. Mineral Commodity Summaries 2026: Nickel, USGS (2026)
  5. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data) (2026)